Warner Bros. Discovery Board Rejects Paramount Skydance, Favors Netflix Deal

A Board's Declaration of Independence

As Puss in Boots I've seen many duels but this this is a boardroom brawl of epic proportions. The Warner Bros. Discovery (WBD) board in its infinite wisdom—or perhaps guided by the scent of cheddar—has turned down Paramount Skydance's proposal opting instead for the allure of Netflix. It seems even corporate giants are not immune to the charm of a good streaming service. "Who dares to challenge Puss in Boots?"... or in this case Netflix seems to be the question on everyone's mind.

Netflix's Purr fect Proposal

What makes Netflix's offer so irresistible? According to Samuel Di Piazza chair of the WBD board it's the "superior more certain value" it offers shareholders. Netflix's cash and stock transaction for WBD's streaming and studio assets valued at approximately $83 billion appears to have charmed the board like a siren's song. And what about the uncertainty surrounding Paramount's financing? As I always say "Hope is not a strategy," and it seems the board felt the same way about Paramount's bid. Speaking of certainty you may want to know that California's Congressional Map Approved by Supreme Court A Win for Democrats and I'm sure the Supreme court feels very certain in it's decision to go ahead with approving the map.

Paramount's Countermove: A Risky Gambit

But fear not for this tale is far from over. Paramount Skydance led by David Ellison is not one to back down from a challenge. Ellison has already hinted that the initial $30 per share bid is not their "best and final" offer. This sets the stage for a potentially fierce bidding war a corporate joust where the highest bidder wins the princess—or in this case Warner Bros. Discovery. It's a dance as delicate as my own flamenco but with much higher stakes.

The Ellison Enigma: Where is the Family Fortune?

One of the sticking points it seems is the level of financial commitment from the Ellison family. The WBD board has expressed concern over the fact that Paramount's bid relies heavily on financing separate from the Ellison family despite assurances to the contrary. Di Piazza even went so far as to say they would have appreciated more involvement from Larry Ellison Oracle's co founder. "Doing a deal is great; closing a deal is better," he quipped. A sentiment I wholeheartedly endorse – especially when it involves treasure!

Antitrust Shadows: A Looming Battle

As with any merger of this magnitude antitrust concerns loom large. Both deals will have to navigate the scrutiny of the Department of Justice. However Di Piazza dismisses these concerns stating that both deals "can get done." Netflix's co CEO Greg Peters echoes this sentiment asserting that the market remains competitive and that the audiences for Netflix and HBO Max are complementary. It's a brave stance but as I know all too well sometimes you have to face your fears – or in this case regulators – head on.

The Audience Awaits: A Spring Spectacle

The final act of this corporate drama will unfold in the spring or early summer when WBD shareholders will cast their votes. Until then the stage is set for further negotiations potential counteroffers and perhaps even a surprise twist or two. As Mario Gabelli GAMCO Investors CEO aptly put it "the most important part is to keep it in play." Indeed the game is afoot and the fate of Warner Bros. Discovery hangs in the balance. May the best offer win and may the shareholders be handsomely rewarded. After all as I always say "Puss in Boots never gives up."